BE GUARANTEED TO SUCCEED CAMPAIGN A research-based approach to reframe perceptions of surety Producer Communications Toolkit 1 I. CAMPAIGN OVERVIEW As producers, we’re passionate about surety. We know the value of our products and the benefits of surety in a highly competitive construction marketplace. Yet, we’ve all had encounters with contractors, owners and lenders who have different perceptions of surety’s value. To some, surety is viewed as just one of many insurance products, like SDI. To others, it’s an unnecessary “line-item” cost or a hassle that adds more process to projects. And for many, the strength of existing relationships and proven track records negate the need for surety. It’s time for a new, more compelling way to talk about surety. NASBP conducted interviews with stakeholders across the construction industry (owners, contractors, lenders, government officials, surety producers and others) and found a common theme: Framing surety in terms of successful outcomes for projects and personal reputations—and using language that is less technical and more connected to the pride and accomplishment clients feel about their projects—can help shift perceptions of surety from a line-item cost to a business advantage. To this end, at NASBP’s Annual Meeting (April 29–May 1, 2018), we kicked off the Be Guaranteed to Succeed campaign to position surety as a driver of project and business success. NASBP communication channels—website, social media and print publications—will introduce and promote the campaign. Shifting perceptions of surety will take time and require your voice, too. If we all talk about surety in terms of ensuring project and personal success, perceptions will begin to change. This Be Guaranteed to Succeed Communications Toolkit has messages you can adapt and use to talk about surety with owners, lenders, contractors and others, including a one-page “sell sheet” and social media content you can promote through your own channels. Each section of the Toolkit includes directions. All of this is intended to be easy for you to use in talking about surety in a new way. Additional materials are available to you through downloads with this Toolkit. Let’s get started! 2 II. MESSAGING Introduction: Owners, lenders and contractors are looking to protect their businesses and reputations. What they have in common is a sense of pride and accomplishment in creating something of lasting value that benefits their communities. Equally important is the integrity and the desire to “get things right” that they bring to their work and the emphasis that they place on the strength of their relationships—lender to borrower/owner, owner to contractor and contractor to subcontractor. Our message to them is simple: Surety ensures project—and personal—success. To communicate this message and reinforce the value of surety with these important audiences, consider incorporating the following into your future conversations about surety: Elevator speech: You need a compelling, succinct way to talk about/pitch the value of surety. The goal is to capture the interest of an owner, lender or contractor and get each to consider surety by appealing to what’s important to them—their business and their professional success. You can adapt the language below to fit your speaking style. There’s an amazing sense of accomplishment to build something of lasting value for the community. And in addition to the project that’s on public display, so is your reputation. Strong relationships, past experiences and the ability to count on others are part of your success and provide opportunities to grow your business. But the unexpected can happen to anyone, from illness to missed deadlines to defaults. That’s where surety comes in. It’s the only risk mitigation product that’s focused on success instead of failure. A surety bond guarantees performance, signaling the surety’s confidence in and commitment to the bonded contractor. Surety gives you control over the most important feature of your project: your reputation for success. 3 Talking points: As you talk with different audiences, it’s useful to think about their motivations and their perceptions of surety. The following audience descriptions of mindsets and talking points are designed to complement the elevator speech above by providing different ways to connect the value of surety with each audience. You can adapt the language to fit your speaking style. Owner Mindset: Research shows that owners are fundamentally optimistic and outcome-oriented; they like the lasting nature of their work and its impact on people’s lives. But they’re also pragmatic, always looking at cost and value. And while most are aware of surety, their knowledge of how bonds work varies. Surety is often viewed as a “line-item cost in a budget” and one of many risk mitigation options available. There is a perception among some owners that surety could hold up a project if something goes wrong while things get resolved, keeping a project from moving forward. Owners who don’t regularly undertake construction projects are more likely to seek guidance from their lender or insurance company on assessing and managing risk, including whether to require surety. I like to use surety bonds because, if there’s a failure of a sub or general contractor, [the surety] will come in and put the pieces of my project back together. Owner Interview Suggested Talking Points with Owners • Surety gives you peace of mind by ensuring a project’s success and protecting your investment. • Surety prequalifies contractors through a thorough vetting process. This level of financial scrutiny can reflect favorably on you with lenders. By requiring surety, you’re letting lenders know the performance of the contract is guaranteed. 4 Lender Mindset: Research shows that lenders view their ability to provide loans and finance projects as facilitating the success and vibrancy of their communities. They want to win/make money. The trust and relationships they develop with borrowers grows out of the meticulous vetting they do. Most view surety bonds as the responsibility of the borrower/owner and assume they are doing similar vetting of contractors and will make the right decision as to whether or not surety is needed. Lenders are also sensitive to the marketplace and how other lenders handle surety requirements. Bonds speak to the financial strength of the contractor with whom the borrower or developer is working. Lender Interview Suggested Talking Points with Lenders • Trust and strong relationships to borrowers are essential elements to your success. The same time and attention you spend getting to know and assess a borrower are mirrored by the work of a surety—vetting and prequalifying the contractor your borrower uses. Surety guarantees performance, so both the contractor and, ultimately, the project will be successful. • Surety protects your financial investments. It ensures projects get completed, allowing borrowers to meet their financial obligations to you. Contractor Mindset: Research shows that successfully completing a project is a core driver of professional satisfaction. Contractors recognize the critical role each member of their team plays on a project and the ripple effect that can happen if someone doesn’t perform. Contractors want to control the decisions that get made on their projects—from selecting subcontractors to troubleshooting problems when they arise—so they can ensure that any work performed meets their standards. Surety is viewed as one of many risk mitigation options available. The third-party structure of surety is sometimes viewed as less flexible and more cumbersome than other insurance products like SDI. Some contractors also feel surety gives them less control over outcomes. We’re results-driven. Our reputation is built on delivering for folks. Contractor Interview 5 Suggested Talking Points with Contractors • In a competitive, relationship-driven industry like construction, it’s important to have the right team in place to be successful, grow your business and keep your reputation intact. Surety guarantees success by vetting your team and ensuring your projects get done according to the contract terms. • Hiring qualified subcontractors/teams is one of the most important and efficient ways to ensure a project is completed successfully. One of the many benefits of surety bonds is thorough prequalification of subcontractors. • Anything can happen on construction projects, including inadvertent subcontractor failure. Make sure your downstream risks are covered with surety bonds to ensure your success. 6 Surety Sell Sheet: As part of the Be Guaranteed to Succeed campaign we’ve created a surety “sell” sheet to help reinforce the value of surety with potential clients. It can be customized with your company logo and contact information and printed for use as needed. We’ve included instructions for how to add your contact information. You can also use the language in other surety bond materials you produce. IT’S MORE THAN A MAJOR CONSTRUCTION PROJECT. IT’S YOUR REPUTATION ON DISPLAY. Anything can happen on a construction project. And everything reflects back on you. Your reputation is built on what you build, regardless of the issues or obstacles you face along the way. When it comes to assuring project outcomes, you need a reliable, qualified team that delivers results. But how can you determine who’s best qualified to do the job or how can you account for the unexpected–missed deadlines, defaults or illness? That’s where a surety bond comes in. It’s the one risk mitigation product focused on making sure the contract is completed and the project succeeds. Surety guarantees performance and protects your reputation for success. The stakes are too high to skip surety bonds: DOWNLOAD SELL SHEET HERE • Non-residential construction spending in the U.S. is projected to reach $567 billion by 2021. (Statista) • The business failure rates among construction companies is 1 in 4.